Correlation Between Timbercreek Financial and US Financial
Can any of the company-specific risk be diversified away by investing in both Timbercreek Financial and US Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Timbercreek Financial and US Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timbercreek Financial Corp and US Financial 15, you can compare the effects of market volatilities on Timbercreek Financial and US Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Timbercreek Financial with a short position of US Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and US Financial.
Diversification Opportunities for Timbercreek Financial and US Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Timbercreek and FTU-PB is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and US Financial 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Financial 15 and Timbercreek Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Timbercreek Financial Corp are associated (or correlated) with US Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Financial 15 has no effect on the direction of Timbercreek Financial i.e., Timbercreek Financial and US Financial go up and down completely randomly.
Pair Corralation between Timbercreek Financial and US Financial
Assuming the 90 days horizon Timbercreek Financial Corp is expected to under-perform the US Financial. But the stock apears to be less risky and, when comparing its historical volatility, Timbercreek Financial Corp is 2.33 times less risky than US Financial. The stock trades about -0.1 of its potential returns per unit of risk. The US Financial 15 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 773.00 in US Financial 15 on November 28, 2024 and sell it today you would earn a total of 8.00 from holding US Financial 15 or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Timbercreek Financial Corp vs. US Financial 15
Performance |
| Timeline |
| Timbercreek Financial |
| US Financial 15 |
Timbercreek Financial and US Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timbercreek Financial and US Financial
The main advantage of trading using opposite Timbercreek Financial and US Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timbercreek Financial position performs unexpectedly, US Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in US Financial will offset losses from the drop in US Financial's long position.| Timbercreek Financial vs. Atrium Mortgage Investment | Timbercreek Financial vs. MCAN Mortgage | Timbercreek Financial vs. Fiera Capital | Timbercreek Financial vs. Firm Capital Mortgage |
| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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